U.S. consumers are alive and doing very well.

Retail sales were up solidly for June 2018, as households increased their purchases of autos and a range of other goods, which also boosted expectations for better than expected second quarter GDP growth.

According to the U.S. Commerce Department, retail sales were up 0.5% for June 2018.  That means retail sales are up 6.6% year over year.  June’s increase followed an even bigger spending spree in May, when sales grew 1.3%, instead of a previously reported 0.8%.

Sales at health and personal care stores leaped 2.2% in June.

Restaurants posted a 1.5% gain. Internet sales jumped 1.3%. And auto dealers reported a 0.9% increase, said Market Watch.

Recent tax cuts, stronger hiring and a plummeting unemployment rate have given Americans much more confidence in the U.S. economy.

“This puts the economy in a very, very good position as it starts its 10th year of forward movement in July,” said Chris Rupkey, chief economist at MUFG, as quoted by Reuters. “This strengthening economy gives the Federal Reserve the green light to raise rates a third time this year at their September meeting.”

This growth comes after consumer spending – which accounts for more than two-thirds of U.S. GDP – cooled off in the first quarter of the year.

Better yet, U.S. GDP could now be on course to easily top 4% for the year.

In May 2018, a number of analysts increased their estimates.

  • Amherst Pierpont Securities raised its estimate to 4.5% from 4.2%.
  • Macroeconomic Advisers increased its forecast to 4% from 3.6%.
  • Natwest raised its projection to about 4% from 3.2%.

At the current pace, we would not be shocked to see the Dow Jones well above 26,000 by the end of this year.

Stay tuned to The Cheap Investor for more.